February 21, 2013

"China Says It May Implement a Carbon Tax"

Taxing Carbon, by Vikas Bajaj, NY Times: Long considered the biggest holdout
in climate change negotiations, China said this week that the country would
implement new taxes designed to curb greenhouse gas emissions. Officials in
Beijing provided few details, but a
report by the state-owned Xinhua news service suggested that the government
is working on a relatively modest plan. ...

The Xinhua report ... did not say how big a tax the country would impose, but it
pointed to a three-year-old proposal by government experts that would have
levied a 10-yuan ($1.60) per ton tax on carbon in 2012 and raised it to 50-yuan
($8) a ton by 2020. Those prices are far below the $80 (500-yuan) a ton that
some experts have suggested would be needed to achieve “climate stability,” and
which would raise the cost of gasoline by about 70 American cents a gallon.

China’s plan will not make a serious dent in global warming, though the tax may
still have some beneficial impact within the country, where air pollution is a
serious problem. ...

Meanwhile, in the U.S., many members of Congress find the idea of carbon taxes
totally anathema and think such taxes would wreck the economy. They might,
however, want to consider a proposal promoted by Mr. Hansen that would take the
money collected from carbon taxes — or carbon fees as he prefers to call them —
and rebate it in full to individuals. That would help consumers pay for more
expensive electricity and gasoline, while giving them an incentive to cut their
use of energy and fossil fuels. It’s an elegant way to limit damage to the
economy while giving people incentives to do what is right for the planet.

Contrary to what "many members of
Congress" (i.e. many Republicans) claim, eliminating a market failure through a carbon tax moves the economy closer to
the optimal growth path rather than further from it.

I'm in total agreement with Mark's comment and I would argue further that the revenue from the carbon tax was rebated to individuals with the Bush tax cuts.

Comments

Taxing Carbon, by Vikas Bajaj, NY Times: Long considered the biggest holdout
in climate change negotiations, China said this week that the country would
implement new taxes designed to curb greenhouse gas emissions. Officials in
Beijing provided few details, but a
report by the state-owned Xinhua news service suggested that the government
is working on a relatively modest plan. ...

The Xinhua report ... did not say how big a tax the country would impose, but it
pointed to a three-year-old proposal by government experts that would have
levied a 10-yuan ($1.60) per ton tax on carbon in 2012 and raised it to 50-yuan
($8) a ton by 2020. Those prices are far below the $80 (500-yuan) a ton that
some experts have suggested would be needed to achieve “climate stability,” and
which would raise the cost of gasoline by about 70 American cents a gallon.

China’s plan will not make a serious dent in global warming, though the tax may
still have some beneficial impact within the country, where air pollution is a
serious problem. ...

Meanwhile, in the U.S., many members of Congress find the idea of carbon taxes
totally anathema and think such taxes would wreck the economy. They might,
however, want to consider a proposal promoted by Mr. Hansen that would take the
money collected from carbon taxes — or carbon fees as he prefers to call them —
and rebate it in full to individuals. That would help consumers pay for more
expensive electricity and gasoline, while giving them an incentive to cut their
use of energy and fossil fuels. It’s an elegant way to limit damage to the
economy while giving people incentives to do what is right for the planet.

Contrary to what "many members of
Congress" (i.e. many Republicans) claim, eliminating a market failure through a carbon tax moves the economy closer to
the optimal growth path rather than further from it.

I'm in total agreement with Mark's comment and I would argue further that the revenue from the carbon tax was rebated to individuals with the Bush tax cuts.

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